The UAE this month joined a small club of countries where the law makes it mandatory for every listed company in the country to have at least one female director on their boards. This is a good sign. Diversity at this level indicates a meritocratic society, a healthy workforce and in turn, a healthy economy.
This law is an amendment of a previous target of 20 per cent female representation set by the UAE’s Securities and Commodities Authority, but that was a “comply or explain” directive to explain any shortfall and was not legally enforced. While quotas can be contentious, they are also key to meeting targets.
In Norway, a 40 per cent female quota was made law in 2003. Companies were left to self-regulate for five years until sanctions passed in 2008 dictated that companies that failed to comply must dissolve.
Last year, women held just 17 per cent of global board seats, according to Deloitte: Norway has now reached 42 per cent. Norway is also, notably, on top of the UN’s Global Gender Inequality Index.
We do not yet know what penalties, if any, the SCA will set against its new quota of one woman per board.
In other countries with quotas, such as France and Belgium, directors of boards that fail to reach the target will not be paid. India has set small fines of Rs50,000-500,000 ($688-6,883) for not meeting gender parity targets, while in Spain, which has a "soft" quota, companies failing to comply risk losing government contracts and subsidies.
Although similar legislation was passed in Iceland in 2010, the progressive country has imposed no sanctions – yet is second in the UN’s gender inequality list.
The UAE has climbed higher and is 31 on the gender equality index, topping the Arab world. The new law is likely to improve these rankings as the base for women on boards is low, at 3.5 per cent.
Some 58 per cent of women in the Emirates work, according to the World Bank, making it the highest participation rate in the Mena region and on par with the US or UK.
The SCA says mandating listed companies to have at least one woman appointed is part of its “keen efforts” to empower Emirati women and encourage them to play a greater role on boards.
It will also help the government’s Vision 2021, to make the UAE a modern, progressive country and one of the best places to do business. The country's leadership has clearly said that it supports gender parity. And one of the goals of Vision 2021 is to ensure a “diversified and flexible knowledge-based economy, powered by skilled Emiratis and strengthened by world-class talent”.
In the US a lack of diversity in business has been dubbed the "John Problem" (and in the UK, the "Peter Problem"). In 2015, Ernst & Young found that women made up 16 per cent of board members of companies on stock market index the S&P 1500 – less than the share of seats held by men named John, Robert, James and William.
There are also more chief executives named John in the US’s top 500 corporations than there are female chief executives (despite only 3 per cent of the population actually being called John).Yet the presence of women on corporate boards assures diversity of thought and is associated with higher returns, greater accountability and higher rates of recruitment and retention of women. When boards are not balanced, businesses are at a disadvantage.
Here, we are seeing women taking their position in the "C-suite" as the pipeline of female talent develops. In January, Hana Al Rostamani – a former independent board director of Du and board member at family business AW Rostamani Group – was named the first-ever female CEO of First Abu Dhabi Bank.
While she cannot sit on the board of FAB while she runs the company, in the future she will be a great candidate for a bank’s board.
Companies that want to employ millennials – and they usually do, and as millennials by 2025 will make up three-quarters of the workforce – must prioritise diversity, as the younger generation likes to work for progressive organisations. In a 2018 survey, 74 per cent of millennials told Deloitte that they believed their organisation was more innovative when it had a culture of inclusion.
Investors also look closely at female representation at the C-suite and board level. Goldman Sachs, for instance, will not underwrite American or European stock market launches of private companies unless they have at least two diverse board members.
But the problem with getting onto one is a question of access. Typically, we use our networks to find people for jobs, and that is no different in the nominations process for board membership. As with many other roles, they are rarely advertised.
Men network with other directors and chief executives – and most boards are all-male. This makes it difficult for current board members and senior executives to even consider women for the roles.
There are male champions in the UAE already, putting women on the boards of both listed and private-sector companies.
The typical route to the boardroom for a woman (or man) with a financial background is to first be invited to join the investment committee. With duties delegated by the board, and with a mixture of members, company staff and independent directors working together, this method is a good way to get to know senior leadership.
At Aurora50, we have partnered with the UAE Central Bank, which regulates two-thirds of companies on the country's stock exchanges, in a clear signal to the market that women on boards matter and are linked to national development. We take pride in creating opportunities for boards to connect with women in the early stages of their careers in senior leadership.
Gender parity is worth a lot of money to the UAE: $101 billion, in fact, or $11,000 per person. The US think tank, Council on Foreign Relations, calculates that if women's working participation were to become fully equal to that of men, the gross domestic product of the UAE would grow by 16 per cent in the next four years. It's something with which we should all get on board.
Diana Wilde is co-founder of Aurora50, a social enterprise working to increase board-level diversity in the UAE